China's retail spending jumps 15.9% in May to $94 billion

ChrisOliver

HONG KONG (MarketWatch) -- China's retail sales rose 15.9% in May from a year earlier, the fastest pace of growth in three years, boosted by the nation's surging stock market and higher food prices. Retail sales totaled 715.8 billion yuan ($94 billion) in May, the National Bureau of Statistics said Wednesday. The pace of increase was slightly higher than expectations for a 15.3% acceleration. Ben Simpfendorfer, an economist with the Royal Bank of Scotland in Hong Kong, said the data reflected a well-established rising trend, however there were potential distortions that might lead to an overstatement of the growth in spending. "It's mainly rising food prices that have inflated retail sales," he said, adding the data was heavily weighted towards expenditures on food. He added consumer spending likely benefited from the wealth-effects arising from the equity market, as investors cashed in gains on shares to fund higher spending. "It may be that the rising equity market has spurred more households to eat out more often," Simpfendorfer said. The jump in consumer spending was the biggest since May 2004.

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